## REGULATORY EVALUATION

NOTICE OF PROPOSED RULEMAKING

FUEL TANK VENT FIRE PROTECTION

14 CFR 25

OFFICE OF AVIATION POLICY AND PLANS

ECONOMIC ANALYSIS DIVISION (APO-300)

Daniel F. Leach

April 21, 20142 

### I. INTRODUCTION Current airworthiness standards include requirements (14 CFR 25.981 “Fuel tank ignition prevention”) to prevent explosi ons inside a fuel tank caused by system failures or external heating of the fuel tank walls. These requirement s do not address explosions caused by externalsource ignition of fuel vapor present in a fuel system vent outlet and the subsequent propagation

of flame from the vent into the fuel tank. Extern al sources that could cause such ignition include lightning, ground handling equipment, or ground fi re following a survivable crash landing in which the fuel tank and vent system remain intact. In this Notice of Public Rulemaking (NPR M) the FAA is proposing an amendment to 14 CFR 25.975 that would require fuel tank designs with the capabil ity to prevent such fuel tank explosions for a minimum of 2 minutes and 30 seconds.



### II. BACKGROUND The Special Aviation Fire and Explosi on Reduction (SAFER) Advisory Committee, chartered by the FAA in 1978, found that flame a rrestors or suppressors are as effective as quenching and suppression systems and supply mo st of the protection offered by nitrogen inerting systems in survivable accidents where minor wing tank damage occurs. Moreover, flame arrestors or suppressors were much more practical than the alternative system s. This remains the case today. For this proposed rulemaking the F AA is drafting an AC for the use of flame

arrestors.



### III. ACRONYMS USED IN THIS DOCUMENT CFR–Code of Federal Regulations FAA–Federal Aviation Administration



### IV. DISCUSSION OF COSTS AND BENEFITS A. Overview of Costs and Benefits of this Proposed Rule The FAA finds the proposed rule to be cost -beneficial because th e breakeven expected benefits of preventing just two fatalities w ould outweigh the expected costs ($4.9 million in present value benefits versus $4.4 million in presen t value costs). If this action is not taken, a hazard would continue to exist even though eff ective and low-cost means are available to

minimize or eliminate it.3 B. Who is Potentially Affected by this Rule? Manufacturers of newly certified part 25 airplane s and U.S. operators of these airplanes are affected by the rule as a result of its applicab ility to new certificati on part 25 airplanes. Manufacturers and operators of currently produce d part 25 airplanes (production cut-in) are affected by the rule as a result of its applicab ility to airplanes engage d in part 121 or 129 operations produced two years or more af ter the effective date of this rule.

C. Principal Assumptions and Sources of Information

 Discount rate is 7 percent (Office of Manageme nt & Budget, Circular A-94, “Guidelines and Discount Rates for Benefit-Cost Analysis of Federal Programs,” October 29, 1992, p. 8).

 Value of statistical life (VSL ) begins at $9.1 million in 2012, and increases thereafter by an annual growth factor of 1.0107. Memorandum: Guidance on Treatment of the Economic Value of a Statistical Life in Department An alyses. [February 2013]. United States, Office of the Secretary of Transportation.

 For small part 25 manufacturers: Two U.S. airp lane certifications in next 10-year period, twenty-one annual U.S. deliveries per U.S. certifi cation; three foreign ai rplane certifications in next 10-year period, eleven annual U.S. deliveries per foreign certification; 15-year airplane production run, 30-year re tirement age. Internal FAA study. 1

 Current airplane models that could be affect ed by production cut-in requirement (Bombardier
Dash 8, CJ-700, and CJ-900): FAA 2013 Fleet Fo recast, Fleet Forecast Sheet “FAA U.S.
Airlines 2013-2013 1-18-2103,” “Totals & FAA Tables.”

 The period of analysis for new certifications is 45 years to account fo r a complete product life cycle determined by a 15-year producti on period and a 30-year service period.

 Certification cost estimates for part 25 airplanes—Small U.S. part 25 manufacturers.

1 We have derived the number of foreign airplane certifications per 10-year period from the source and made a slight correction in the figure for U.S. deliver ies per foreign airplane certification.4  Maintenance cost per airplane (every four years) for Bombar dier CJ-700/CJ-900 regional jets (subject to production cut-in)--$240. As this estima te is for passenger airplane models it is much lower than the estimate provided by U.S. manufacturers ($415 annually), which is for business jet models. Since business jets are more prone to sit for extended periods of time, their flame arrestors can more easily be clogged by ice, mud daubers or other debris, thus requiring more frequent and longer maintenance.

 Minimal fuel costs as flame arrest ors weigh between 2 and 4 pounds each.

D. Costs of this Proposed Rule The costs of the proposed rule are engineer ing, production, and mainte nance compliance costs for newly certificated part 25 airplanes and for new production of curre ntly produced part 25 airplanes used in part 121 opera tions (production cut-in). We fi rst estimate compliances costs for

new certifications and then for the production cut-in.

Compliance Cost of New Certifications For newly certificated airplane s compliance costs consist of engineering and production costs of U.S. manufactured airpla nes delivered to U.S. opera tors and maintenance costs 2 of both U.S. and foreign airplanes delivered to U.S. operators. U.S. part 25 manufacturers directly incur the engineering and production costs wh ile U.S. operators directly incur the maintenance costs. Engineering and production costs incurred by forei gn manufacturers are not included in the costs of compliance, as costs directly attributable to foreign entities are not included in the cost and benefit analysis of proposed U.S. regulations.
To calculate the cost of new U.S. certifications, we assume that all new certifications will be approved one year after the effec tive date of the rule, with pro duction beginning one year later. Using an airplane life cycle model, we estimate the economic impact for two new certificates, production of 21 airplane/certificat es per year, production runs of 15 years and an airplane retirement age of 30 years. The costs of new cer tifications are calculated over an airplane life cycle of 45 years (shown in Appendix Table 1) . Appendix Table 1 shows 42 deliveries by small U.S. part 25 manufacturers annually beginning in 2017 and ex tending for 15 years through 2031.

2 As flame arrestors weigh between 2 an d 4 pounds each, fuel costs are minimal, so maintenance cost is the only operating cost estimated.5 The size of the “New Cert. Operating Fleet” is calculated by adding 33 foreign deliveries to the 42 domestic deliveries annually and accumula ting through the production cycle. So for 2017, the first delivery year, 33 foreign deliveries are added to 42 domes tic deliveries resulting in an operating fleet of 75. Another 75 airplanes are adde d in 2018, resulting in an operating fleet of 150. The new certification operating fleet continues to rise by 75 airplanes annually, peaking at a level of 1,125 airplanes at the end of the producti on run in 2031. The size of the new certification operating fleet remains at this peak level unt il 2047, when it declines by 75, as the first 75 airplanes delivered in 2017 reach their retirement age of 30 years. The size of the new certification operating fleet conti nues to decline by 75 airplanes a year reaching zero in 2061 after all airplanes in the fleet have retired.

Basic cost estimates were solicited from sma ll part 25 manufacturers because large airplane manufacturers (Boeing and Airbus) are already compliant with the proposed rule. These cost

estimates are shown in Table 1 below.



### TABLE 1—INDUSTRY COST ESTIMA TES USING FLAME ARRESTORS TO COMPLY WITH PR OPOSED RULE

Cost Category Cost Notes Nonrecurring Engineering Costs $ 142,000 per model

Recurring Cost (Hardware & Inst allation) $ 3,000 per model (two flame arrestors @ $1,500 each) Maintenance Cost (U.S. manufactured airplanes) $ 415 per airplane annually

Maintenance Cost (Bombardier manufact ured airplanes) $ 240 per airplane every 4 years

The compliance cost estimates consist of nonrecurring (one-time) engineering costs, production costs for two flame arrestors per airpla ne (one per fuel tank) and maintenance costs per airplane per year. (The Bombardier main tenance cost estimate will be used later for estimating production cut-in costs of compliance.) These three costs are incorporated in a life cycle model from airplane design to retirement of the last airplane. As flame arrestors weigh between 2 and 4 pounds each, fuel costs are minima l, so maintenance cost is the only operating

cost estimated. These cost estimates are used in the airplane life cycle model introduced above. The assumed two new U.S. certifications in the next ten ye ars results in a total engineering costs of $284,000.6 The 42 annual deliveries by small U.S. manufact urers result in $ 3,000 in hardware production costs per airplane, for a total of $126,000 annua lly over the 15-year production period. Annual maintenance costs are calculated by multiplying the size of each year’s operating fleet by the $415 per airplane maintenance cost. For the 75 ai rplanes in the new certif ication operating fleet in 2017 the maintenance cost is $31,125. Mainte nance cost moves in proportion to the new certification operating fleet, rising as the size of the operating fleet increases and falling as the size of the operating fleet decreases. After the initial nonrecurring engi neering costs, annual “Total Cost” in Appendix Table 1 is the sum of hardware production costs and ma intenance costs. Annual “PV Cost” is the

discounted value of the annual Total Cost fi gures, discounting to the beginning of 2014. The totals over all years of the airplane cycle are shown in in the to p part of Table 2.

Compliance Costs of Production Cut-In In addition to the requirement applying to new certifications, the proposed rule would also require a production cut-in for currently produced part 25 airplanes used in part 121 operations. 3

To calculate this cost, we first note that the only currently produced a nd U.S. operated airplane models not already in compliance are the Bomb ardier Dash 8 turboprops and Bombardier CJ700/CJ-900 regional jets. The final rule would a pply to these Bombardier models produced beginning in 2018. Since the FAA for ecasts no future Dash 8 deliverie s to U.S. airline operators after 2017, we expect no Dash 8 co mpliance cost for these operators. The FAA does forecast the delivery of 338 CRJ-700 and 161 CRJ-900 model airplanes to U.S. airline operators over the period 2018-2033. See Appendix Table 4. The engineering and production compliance costs for these airplanes are not included in our cost estimates because, as noted above, costs directly incurred by foreign en tities are not included in the cost and benefit analysis of proposed U.S. regulations. Accordi ngly, for these airplanes we assess the impact on U.S. operators only, using Bombardier’s maintena nce cost estimate of $240 every four years. Allocating this cost as $60 annually and assumi ng a production period of 16 years, we calculate the production cut-in costs for thes e airplanes as maintenance cost /airplane times the number of airplanes over their productiv e life, using a procedure anal ogous to that used for new

3 We do not estimate costs for the analogous part 129 requ irement as these costs are directly incurred by foreign operators.7 certifications. See Appendix Table 2. We summarize these results in the bottom part of Table 2

below.



### TABLE 2

— COSTS OF NEW CERTIFICAT IONS AND COSTS OF PRODUCTION CUT-IN

Cost Categories Total Undiscounted Cost PV Cost

Nonrecurring Engineering Costs $ 284,000 $ 231,829 Production Costs (Hardware & Installation) $ 1,890,000 $ 936,781 Operational Costs (Maintenance Costs) $ 14,006,250 $ 3,072,550 Total Costs for New Certification Airplanes $ 16,180,250 $ 4,241,160

Maintenance Costs for Production Cut-In Airplanes (CRJ-700 & CRJ-900) $ 898,200 $ 178,439
Total Costs of the Rule $ 17,078,450 $ 4,419,599

Note: Details may not sum to totals due to rounding.

E. Benefits of this Proposed Rule Notwithstanding the absence of post-crash fuel tank explosions in rece nt years and lacking other quantifiable bases upon which to estimate futu re risks, the merits of the proposed rule can be assessed by first noting that nearly all part 25 airplane manuf acturers whose airplanes operate in the U.S. are already in compliance. Second, we estimate that just two averted fatalities would

offset the costs of the rule.

We estimate the breakeven benefits of the rule by estimating the number of averted fatalities necessary to offset the $4.4 million present value cost s of the rule. After initially finding that one averted fatality was not enough to of fset the costs of the rule, we found that two averted fatalities were sufficient to offset the costs. Our procedure is to first estimate a fatality rate per airplane year as the number of averted fatalities divided by the number of airplane years 4 in the airplane life cycle = 2/49720 = 0.00004105. The benefits for any year are then equal to this rate times the year’s operating fleet multiplied by the VSL for the year. 5 (Appendix Table 3 shows that the

4 The number of airplane years in th e airplane life cycle is calculated by summing for each year of the 45-year airplane life cycle the number of airplanes in service.

5 An Office of the Secretary of Transportation Memorandum estimates of the VSL for 2012 at $9.1 million. The8 VSL increases from $9.6 million for 2017, the fi rst year of production and service, to $15.3 million in 2061, the last year of the airplane life cycle.) Present value benefits are calculated by discounting each year’s benefits by the 7% disco unt factor for the year. Table 3 summarizes the total undiscounted and present va lue benefits over the airplane life cy cle along with the undiscounted and present value costs already discussed.



### TABLE 3—TOTAL COSTS AND BENEFITS OF PROPOSED RULE

Undiscounted PV Total Costs $ 17.1 $ 4.4
Total Benefits $ 24.6 $ 4.9

The FAA finds the proposed rule to be cost-ben eficial because the costs of the rule are low enough that the expected benefits of preventing ju st two fatalities woul d outweigh the expected

costs. If this action is not take n, a hazard would continue to ex ist even though effective and lowcost means are available to minimize or elimin ate it. As noted previously, large airplane manufacturers are already in co mpliance with the proposed rule, having voluntarily provided the level of safety required by the rule.

Memorandum provides the additional information that the benefits of avoided fatalities should be adjusted annually by the growth factor, 1.0107. This adjustment takes into account the effect on VSL of changes in real income over time.9APPENDIX--TABLE 1. COST ESTIMATES FOR NEW CERTIFICATION AIRPLANESEvent/Count YearUSMfrDeliveriesRetire-mentsNonrecurring CertiicationCostRecurring.Cost(Hardware)ForeignDeliveriesNewCert.OperatingFleetMaintenanceCostTotalCost PV Cost2014Effective Date of Rule...20152 Certifications Occur...2016 284,000 284,000 231,829Deliveries Begin... 12017 42 126,000 33 75 25,500 151,500 115,5792 2018 42 126,000 33 150 51,000 177,000 126,1993 2019 42 126,000 33 225 76,500 202,500 134,9344 2020 42 126,000 33 300 102,000 228,000 141,9875 2021 42 126,000 33 375 127,500 253,500 147,5396 2022 42 126,000 33 450 153,000 279,000 151,7587 2023 42 126,000 33 525 178,500 304,500 154,7928 2024 42 126,000 33 600 204,000 330,000 156,7819 2025 42 126,000 33 675 229,500 355,500 157,84610 2026 42 126,000 33 750 255,000 381,000 158,10111 2027 42 126,000 33 825 280,500 406,500 157,64812 2028 42 126,000 33 900 306,000 432,000 156,57713 2029 42 126,000 33 975 331,500 457,500 154,97114 2030 42 126,000 33 1050 357,000 483,000 152,90515 2031 42 126,000 33 1125 382,500 508,500 150,44716 2032 1125 382,500 382,500 105,76417 2033 1125 382,500 382,500 98,84518 2034 1125 382,500 382,500 92,37919 2035 1125 382,500 382,500 86,33520 2036 1125 382,500 382,500 80,68721 2037 1125 382,500 382,500 75,40922 2038 1125 382,500 382,500 70,47523 2039 1125 382,500 382,500 65,86524 2040 1125 382,500 382,500 61,556Note: Present values are calculated by discounting to the beginning of 2014, so the discount factor for 2014 is 0.935, etc.10APPENDIX--TABLE 1. COST ESTIMATES FOR NEW CERTIFICATION AIRPLANES (Continued)Event/Count YearUSMfrDeliveriesRetire-mentsNonrecurring CertiicationCostRecurring.Cost(Hardware)ForeignDeliveriesNewCert.OperatingFleetMaintenanceCost Total Cost PV Cost25 2041 1125 382,500 382,500 57,52926 2042 1125 382,500 382,500 53,76527 2043 1125 382,500 382,500 50,24828 2044 1125 382,500 382,500 46,96129 2045 1125 382,500 382,500 43,88830 2046 1125 382,500 382,500 41,01731 2047 75 1050 357,000 357,000 35,77832 2048 75 975 331,500 331,500 31,04933 2049 75 900 306,000 306,000 26,78634 2050 75 825 280,500 280,500 22,94735 2051 75 750 255,000 255,000 19,49636 2052 75 675 229,500 229,500 16,39937 2053 75 600 204,000 204,000 13,62338 2054 75 525 178,500 178,500 11,14039 2055 75 450 153,000 153,000 8,92440 2056 75 375 127,500 127,500 6,95041 2057 75 300 102,000 102,000 5,19742 2058 75 225 76,500 76,500 3,64243 2059 75 150 51,000 51,000 2,26944 2060 75 75 25,500 25,500 1,06045 2061 75 0 0 0 0Total$ 284,000 $ 1,890,000 33,750 $14,006,250 $ 16,180,250 $ 4,241,160Total ($ mil.)$ 0.3 $ 1.9 $ 14.0 $ 16.2 $ 4.2Data/AssumptionsNonrecurring Certification Cost $142,000 Production Period 15 yearsRecurring Cost (Hardware)/Airplane $3,000 U.S. Mfr Deliveries/Cert./Year 21Maintenance Cost/Airplane/Year $415 Foreign Deliveries/Year 33Discount Rate 7% Airplane Retirement Age 30 yearsNumber of U.S. Certifications (10 years) 211APPENDIX--TABLE 2. COST ESTIMATES FOR BOMBARDIER CRJ-700/900PRODUCTION CUT-IN AIRPLANESYearCRJUSDeliveriesCRJRetirementsCRJOperatingFleetCRJMaintenanceCostCRJ PVMaintenanceCost YearCRJUSDeliveriesCRJRetirementsCRJOperatingFleetCRJMaintenanceCostCRJ PVMaintenanceCost20142015201620172018 34 34 2,040 1,454 2041 499 29,940 4,5032019 27 61 3,660 2,439 2042 499 29,940 4,2082020 26 87 5,220 3,251 2043 499 29,940 3,9332021 21 108 6,480 3,771 2044 499 29,940 3,6762022 22 130 7,800 4,243 2045 499 29,940 3,4352023 42 172 10,320 5,246 2046 499 29,940 3,2112024 37 209 12,540 5,958 2047 499 29,940 3,0012025 36 245 14,700 6,527 2048 34 465 27,900 2,6132026 39 284 17,040 7,071 2049 27 438 26,280 2,3002027 41 325 19,500 7,562 2050 26 412 24,720 2,0222028 38 363 21,780 7,894 2051 21 391 23,460 1,7942029 28 391 23,460 7,947 2052 22 369 22,140 1,5822030 29 420 25,200 7,978 2053 42 327 19,620 1,3102031 29 449 26,940 7,971 2054 37 290 17,400 1,0862032 24 473 28,380 7,847 2055 36 254 15,240 8892033 26 499 29,940 7,737 2056 39 215 12,900 7032034 499 29,940 7,231 2057 41 174 10,440 5322035 499 29,940 6,758 2058 38 136 8,160 3892036 499 29,940 6,316 2059 28 108 6,480 2882037 499 29,940 5,903 2060 29 79 4,740 1972038 499 29,940 5,516 2061 29 50 3,000 1172039 499 29,940 5,156 2062 24 26 1,560 572040 499 29,940 4,818 2063 26 0 0 0Total 499 499 $898,200 $178,43912APPENDIX--TABLE 3. BENEFITS ESTIMATES FOR PROPOSED RULEYearUS NewCert.DeliveriesRetire-mentsForeignNew Cert.DeliviesBombardier PdnCut-InDeliveriesOperating FleetVSLIncomeGrowthFactorVSL($ mil.)Benefits($)PVBenefits($)YearRetirementsOperat-ingFleetVSLIncomeGrowthFactorVSL($ mil.)Benefits($)PVBenefits($)2017 42 33 75 1.055 9.6 29,564 22,5552018 42 33 34 184 1.066 9.7 73,307 52,2672019 42 33 27 286 1.077 9.8 115,164 76,7392020 42 33 26 387 1.089 9.9 157,502 98,08420411624 1.362 12.4 826,471 124,3032021 42 33 21 483 1.101 10.0 198,675 115,631 2042 1624 1.376 12.5 835,314 117,4142022 42 33 22 580 1.112 10.1 241,127 131,157 2043 1624 1.391 12.7 844,252 110,9072023 42 33 42 697 1.124 10.2 292,869 148,880 2044 1624 1.406 12.8 853,286 104,7602024 42 33 37 809 1.136 10.3 343,567 163,226 2045 1624 1.421 12.9 862,416 98,9552025 42 33 36 920 1.148 10.5 394,887 175,335 2046 1624 1.436 13.1 871,644 93,4702026 42 33 39 1034 1.161 10.6 448,568 186,1402047 75 1549 1.451 13.2 840,285 84,2132027 42 33 41 1150 1.173 10.7 504,229 195,5492048 109 1440 1.467 13.3 789,514 73,9482028 42 33 38 1263 1.186 10.8 559,700 202,8612049 102 1338 1.483 13.5 741,440 64,9022029 42 33 28 1366 1.198 10.9 611,822 207,2452050 101 1237 1.498 13.6 692,806 56,6782030 42 33 29 1470 1.211 11.0 665,448 210,6642051 96 1141 1.514 13.8 645,877 49,3822031 42 33 29 1574 1.224 11.1 720,151 213,0672052 97 1044 1.531 13.9 597,293 42,6802032 24 1598 1.237 11.3 738,955 204,3272053 117 927 1.547 14.1 536,029 35,7962033 26 1624 1.250 11.4 759,014 196,1442054 112 815 1.564 14.2 476,309 29,7272034 1624 1.264 11.5 767,135 185,273 2055111 704 1.580 14.4 415,840 24,2552035 1624 1.277 11.6 775,343 175,005 2056114 590 1.597 14.5 352,231 19,2012036 1624 1.291 11.7 783,640 165,306 2057116 474 1.614 14.7 286,007 14,5712037 1624 1.305 11.9 792,024 156,145 2058113 361 1.632 14.8 220,154 10,4822038 1624 1.319 12.0 800,499 147,491 2059103 258 1.649 15.0 159,024 7,0762039 1624 1.333 12.1 809,064 139,317 2060104 154 1.667 15.2 95,937 3,9902040 1624 1.347 12.3 817,721 131,596 2061104 50 1.685 15.3 31,482 1,2242062 24 26 1.703 15.5 16,546 6012063 26 0 1.721 15.7 0 0Total630495499162448,720 $24,630,581 $4,865,341Notes: 1. Present values are calculated by discounting to the beginning of 2014, so the discount factor for 2014 is 0.935, etc.2. Details may not add up to totals due to rounding.13APPENDIX--TABLE 4. FAA FORECAST OF DELIVERIES OFCJ700/CJ900 AIRPLANES TO U.S AIRLINEOPERATORSYear 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033Total2018-2033Average2018-2033CRJ-700 24 17 19 14 15 33 28 29 28 30 27 16 15 17 12 14 338 21CRJ-900 10 10 7 7 7 9 9 7 11 11 11 12 14 12 12 12 161 10Source: FAA 2013 Fleet Forecast